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Astor’s Son Misstated Gifts for Tax Purposes, Accountant Says

By John Eligon July 1, 2009 4:45 pmJuly 1, 2009 4:45 pm

Brooke Astor gave her son roughly $5.1 million in gifts in the form of cash and stocks in 2003, but her son, Anthony D. Marshall, omitted about $1.7 million of that amount from a gift tax return for that year, according to testimony in State Supreme Court in Manhattan on Wednesday.

Among the many things prosecutors have charged in the trial of Mr. Marshall is that he falsified business records, saying that he misled Mrs. Astor’s accountant about the value of the gifts his mother gave him in 2003. That led the accountant, Stephen Cohen, to file an inaccurate gift tax return for Mrs. Astor that year, prosecutors have charged. The inaccurate filing saved Mrs. Astor about $800,000 in taxes, prosecutors have said, thereby increasing the value of her estate, which Mr. Marshall would control after her death.

After Mrs. Astor signed a letter in August 2003 authorizing her son to receive a $5 million gift from her, Mr. Marshall transferred various assets from his mother’s accounts into his accounts.

In one instance, Mr. Marshall transferred $757,320 from an account his mother held with the UBS financial company into one of his accounts, and told her accountant to write it off as a personal expense for his mother, Mr. Cohen testified on Wednesday.

Mr. Marshall, who had the right to manage his mother’s financial affairs with her power of attorney, also transferred a little more than $1 million to himself from his mother’s account, but never told Mr. Cohen that it was a gift, the accountant testified. Although Mr. Marshall was supposed to inform him when a cash transaction was a gift — susceptible to a roughly 50 percent gift tax — Mr. Cohen said that as Mrs. Astor’s accountant, he should have caught it.

“It wasn’t within my scope of engagement, but I should have been smarter on this one,” Mr. Cohen said. “I’m culpable for making an error.”

In 2003, Mrs. Astor — then 101 years old — also gave $500,000 to Delphi Productions, the theater company that Mr. Marshall and his wife, Charlene, ran, according to documents presented into evidence. But by a complex calculation, they determined that it was worth only $83,333 to the production company and, therefore, only charged that amount on the gift tax return, Mr. Cohen testified.

No gift tax returns were filed for Mrs. Astor in 2001, 2002, 2004, 2005, 2006 or 2007, according to a fact agreed on in court by both the prosecution and the defense. In 2004 and 2006, Mr. Marshall received two pieces of artwork from his mother worth hundreds of thousands of dollars, according to prior testimony.

The prosecution, which contends that Mr. Marshall improperly took those works from his mother, will probably argue that if they were gifts, then they should have been included in gift tax returns from those years. Mrs. Astor — who died on Aug. 13, 2007, at age 105 — saved the $800,000 in 2003 because, in that case, she had agreed to pay her son’s gift taxes, the accountant said.

If convicted on the count of falsifying business records, Mr. Marshall faces up to four years in prison.

This fool should beg prosecutors to negotiate a quick plea agreement suspending a prison sentence before he ends up spending the rest of his life in a jail cell, which could be quite a while If he inherited any of his mother’s longevity.

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